Rule 275: Optional Board approval for an investment fund under section 9(12)
Rule 275 gives an investment fund the option of getting the Board's approval of its eligibility for section 9(12). The application goes in writing, with documents, to the CBDT Member supervising the Foreign Tax and Tax Research Division, three months before the tax year. A committee examines it and the Board decides within two months from the end of the month of application. Approval continues for later years unless withdrawn.
Official notified Income-tax Rules, 2026Need advice on Rule 275?
This article is for general information. Read the official Rules and applicable Act amendments, including the Taxation and Other Laws (Amendment) Act, 2026. If you need professional advice for your situation, contact Bizeneed.
On this page
Bare law
Rule 275 - Approval of the investment fund at its option for purposes of section 9(12)
(1) An investment fund, may at its option, seek approval of the Board regarding its eligibility for the purposes of section 9(12).
(2) The fund seeking approval, may make an application, in writing, enclosing relevant documents and evidence, to the Member, Central Board of Direct Taxes, having supervision and control over the work of Foreign Tax and Tax Research Division.
(3) The application referred to in sub-rule (2) shall be made three months before the beginning of the tax year for which the fund seeks the approval.
(4) The Board shall notify a committee headed by a Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax and consisting of two other Income-tax authorities, not below the rank of Commissioner, to examine the application and submit recommendations regarding grant of approval or otherwise and the conditions thereof, if any, subject to which such approval is to be granted.
(5) The committee on behalf of the Board may, before giving its recommendation, call for such documents or information from the investment fund, the Income-tax authorities and other Departments or agencies, as it may deem fit.
(6) The Board, on the basis of the recommendations of the committee, shall, within two months from the end of the month in which the application has been made, —
(a) by an order in writing, grant approval to the fund subject to such conditions as it may deem fit; or
(b) for reasons to be recorded in writing, reject the application.
(7) The approval once granted, subject to any condition specified in this behalf, shall be applicable for the tax year referred to in sub-rule (3) and subsequent tax years, unless it is withdrawn by the Board.
(8) The benefit of section 9(12) shall not be denied to an eligible investment fund, which has been granted approval, for any tax year for which the approval is in force and has not been withdrawn.
(9) The Board may withdraw the approval granted to any fund, if it is satisfied that —
(a) the approval has been obtained on the basis of misrepresentation of facts or fraud; or
(b) the conditions mentioned in section 9(12) and Schedule I to the Act and the guidelines specified under paragraph 5 of the said Schedule are not fulfilled; or
(c) any condition, subject to which approval was granted, has been violated.
(10) No order rejecting the application or withdrawing the approval, shall be passed without giving a reasonable opportunity of being heard and such order shall be communicated to the –
(a) fund;
(b) the Assessing Officer; and
(c) the Principal Commissioner of Income-tax or the Commissioner of Income-tax having jurisdiction over the fund.
Rule breakdown
Application: Rule 275(1) to (3)
Optional: the fund "may at its option" seek approval.
In writing, with relevant documents and evidence, to the Member, CBDT, supervising the Foreign Tax and Tax Research Division.
Filed three months before the beginning of the tax year for which approval is sought.
Examination and decision: Rule 275(4) to (6)
A committee headed by a Principal Chief Commissioner or Chief Commissioner, with two other authorities not below Commissioner, examines and recommends.
The committee may call for documents or information from the fund, income-tax authorities and other departments or agencies.
The Board decides within two months from the end of the month of application: approval with conditions, or rejection with recorded reasons.
Validity and withdrawal: Rule 275(7) to (10)
Approval applies for the tax year applied for and later years, unless withdrawn.
Benefit of section 9(12) is not denied for a year in which approval is in force.
Withdrawal grounds: misrepresentation or fraud; conditions of section 9(12), Schedule I or its guidelines not met; or approval conditions violated.
No rejection or withdrawal without a reasonable opportunity of being heard; the order goes to the fund, the Assessing Officer and the jurisdictional PCIT or CIT.
Key takeaways
Optional
Approval is at the fund's option.
Timeline
Apply three months before the tax year; decision within two months after the month of application.
Protection
Approved funds keep section 9(12) benefit while approval is in force.
Practical checklist
- Plan the application at least three months before the target tax year.
- Monitor ongoing compliance with approval conditions.
Avoid
- Do not file the application late for the year you want covered.
FAQs
Is Board approval mandatory for section 9(12)?
No. Rule 275(1) says the fund may at its option seek approval.
When must the application be made?
Three months before the beginning of the tax year (Rule 275(3)).
How long is the approval valid?
For that tax year and subsequent tax years unless withdrawn (Rule 275(7)).
On what grounds can approval be withdrawn?
Misrepresentation or fraud, non-fulfilment of section 9(12) and Schedule I conditions or guidelines, or breach of approval conditions (Rule 275(9)).
Glossary
- Section 9(12)
- The provision of the Act read with Schedule I for eligible investment funds.
- Committee
- The three-member committee notified by the Board under Rule 275(4).